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By Ben Simmoneau

PHILADELPHIA (CBS) — For the first time ever on Thursday, the state watchdog organization that oversees the city of Philadelphia’s finances could reject its five-year financial plan. On the line is $300 million in state funding for the city.

If the city is not able to submit a plan that is eventually approved by PICA – the Pennsylvania Intergovernmental Cooperation Authority – it risks losing its state funding. Right now, sources tell Eyewitness News that PICA will not approve Mayor Nutter’s five-year plan as it is currently written.

Adding to the troubles, City Controller Alan Butkovitz also believes Mayor Nutter’s plan is unrealistic.

At the heart of the issue is a new contract with the city’s firefighters. Twice now, arbitrators have awarded the firefighters’ union raises that could cost the city $200 million over the next five years. But the city’s plan does not account for that money. Instead, city officials say they are appealing the decision and insist the city will be victorious and the cost will be nothing.

“Even if the city wins, it will go right back to the arbitrators that have found against the city twice,” Butkovitz told Eyewitness News. “They’re saying something that’s preposterous. It’s not reasonable to budget zero for something that is going to be a figure higher than zero.”

Butkovitz sent the PICA board a letter Wednesday urging it to reject the city’s five-year plan. He says it’s also unrealistic for the city to assume that contracts with its two large non-uniform employees’ unions will also cost nothing additional over the next five years. Those employees have already gone without raises for four years, as they’ve worked without a contract.

There are also the unknown ramifications of the financial mess that is the School District of Philadelphia. Its structural deficit over the next five years exceeds $1 billion.

Sam Katz, the chair of the PICA board, agrees that the city’s five-year plan presents some serious concerns.

“We have tried to signal them [city officials] what we think would enable us to support a five-year plan, but it’s not a plan that assumes that firefighter compensation would be kept at zero,” he said. “I would not support that, and I have sent that message to the mayor and the finance director and others.”

City Finance Director Rob Dubow says he is having conversations with PICA board members about the concerns but would not say if the five-year plan is being revised.

“We’re hoping that the city will make some adjustments to the plan and would do that today or tomorrow,” Katz said.

If the city is unable to present a plan that PICA eventually approves, steps would then begin to cut off hundreds of millions of dollars in state funds for the city.

“That’s not an outcome that’s in anyone’s interest,” Katz said.

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